A big shake up in the printing plate sector is on its way as the three major producers each report declining volumes and margins under pressure.
Agfa has already announced the closure of plate production in Leeds and in France, but the company warns that this is not enough. In the company’s Q3 results, Agfa reports that sales in its offset plates division have fallen 17.3% this year. While much of this can be attributed to the effects of the Covid-19 pandemic, there is a belief that pre-Covid volumes will not return. These actions are intended to align printing plate production capacity to the evolution of the offset industry, it says.
The company reported sales of €168 million for the quarter, down from €212 million, so it remains a substantial business for Agfa. The nub, however, is that it is not a profitable one.
“To improve profitability and to address the significant decline in market demand, Agfa is reviewing its offset business model, simplifying its organisation and streamlining its product offering. The company also estimates that the current pricing levels in the market are not sustainable. It is looking into ways to adapt the earning model for certain services it provides to its customers.”
The decline in the offset business is greater than the decline for revenues across the group as a whole. Digital print revenues are down an equivalent amount with investment decisions delayed by the uncertainty created by the pandemic. A post Covid bounce back in equipment sales and also an improvement in the offset division is expected, as the impact of the factory closures is felt in the current quarter and into the new year.
Agfa, though, is not alone in making changes. Fujifilm has noted decreased demand for products in its graphic systems division, covering plates and inkjet, which has been felt in the first half of its financial year. The business has seen a drop of 24.8% in revenues in graphic systems and 20.5% in inkjet compared to an 11.9% decline across the group’s activities.
Demand for printing plates has fallen as a result of Covid, says Fujifilm, but looking forward it is not expecting a full recovery. “Henceforth, we intend to promote sales of processless CTP plates and other environmentally friendly products,” it says.
Fujifilm also rivals Agfa in large format inkjet, commenting that demand for printers and ink in Europe “decreased sharply.” It remains optimistic for printing: “We will continue to aim for business growth by developing and providing innovative products such as the Jetpress 750S,” it says. Its document systems division, now the 100% owner of FujiXerox has suffered from delays to investment decisions but says that recovery is underway and that by the end of its financial year in March, volumes in Japan are expected to be 95% of where they had been a year earlier.
Kodak does not report the impact across all its plates, confining commentary to the process-free Sonora range. After a precipitous drop in Q2, volumes of Sonora are down 8% year on year. Annuity revenues for Prosper are up by 10% over the year to date thanks to increased sales of print heads, of which revenues are up 3%.
The emphasis in this quarter is about strengthening the balance sheet, with another $100 million wiped from the debt total even with a $63 million decline in revenue for the quarter, compared to a year earlier. This was a little better than in the second quarter, though it resulted in a $4 million Ebitda loss, a $12 million swing from Q3 last year.
